OEE – A Race Against Time

If “Time is Money”, is it reasonable for us to consider that “Wasting Time is Wasting Money?”

Whether we are discussing customer service, health care, government services, or manufacturing – waste is often identified as one of the top concerns that must be addressed and ultimately eliminated. As is often the case in most organizations, the next step is an attempt to define waste. Although they are not the focus of our discussion, the commonly known “wastes” from a lean perspective are:

Over-Production

Inventory

Correction (Non-Conformance – Quality)

Transportation

Motion

Over Processing

Waiting

Resourcefulness is another form of waste often added to this list and occurs when resources and talent are not utilized to work at their full potential.

Where did the Time go?

As a lean practitioner, I acknowledge these wastes exist but there must have been an underlying element of concern or thinking process that caused this list to be created. In other words, lists don’t just appear, they are created for a reason.

As I pondered this list, I realized that the greatest single common denominator of each waste is TIME. Again, from a lean perspective, TIME is the basis for measuring throughput. As such, our Lean Journey is ultimately founded on our ability to reduce or eliminate the TIME required to produce a part or deliver a service.

As a non-renewable resource, we must learn to value time and use it effectively. Again, as we review the list above, we can see that lost time is an inherent trait of each waste. We can also see how this list extends beyond the realm of manufacturing. TIME is a constant constraint that is indeed a challenge to manage even in our personal lives.

To efficiently do what is not required is NOT effective.

I consider Overall Equipment Effectiveness (OEE) to be a key metric in manufacturing. While it is possible to consider the three factors Availability, Performance, and Quality separately, in the context of this discussion, we can see that any impediment to throughput can be directly correlated to lost time.

To extend the concept in a more general sense, our objective is to provide our customers with a quality product or service in the shortest amount of time. Waste is any impediment or roadblock that prevents us from achieving this objective.

Indirect Waste and Effectiveness

Indirect Waste (time) is best explained by way of example. How many times have we heard, “I don’t understand this – we just finished training everybody!” It is common for companies to provide training to teach new skills. Similarly, when a problem occurs, one of the – too often used – corrective actions is “re-trained employee(s).” Unfortunately, the results are not always what we expect.

Many companies seem content to use class test scores and instructor feedback to determine whether the training was effective while little consideration is given to developing skill competency. If an employee cannot execute or demonstrate the skill successfully or competently, how effective was the training? Recognizing that a learning curve may exist, some companies are inclined to dismiss incompetence but only for a limited time.

The company must discern between employee capability and quality of training. In other words, the company must ensure that the quality of training provided will adequately prepare the employee to successfully perform the required tasks. Either the training and / or method of delivery are not effective or the employee may simply lack the capability. Let me qualify this last statement by saying that “playing the piano is not for everyone.”

Training effectiveness can only be measured by an employee’s demonstrated ability to apply their new knowledge or skill.

Time – Friend or Foe?

Lean tools are without doubt very useful and play a significant role in helping to carve out a lean strategy. However, I am concerned that the tendency of many lean initiatives is to follow a prescribed strategy or formula. This approach essentially creates a new box that in time will not be much different from the one we are trying to break out of.

An extension of this is the classification of wastes. As identified here, the true waste is time. Efforts to reduce or eliminate the time element from any process will undoubtedly result in cost savings. However, the immediate focus of lean is not on cost reduction alone.

Global sourcing has assured that “TIME” can be purchased at reduced rates from low-cost labour countries. While this practice may result in a “cost savings”, it does nothing to promote the cause of lean – we have simply outsourced our inefficiencies at reduced prices. Numerous Canadian and US facilities continue to be closed as workers witness the exodus of jobs to foreign countries due to lower labor and operating costs. Electrolux closes facility in Webster City, Iowa.

I don’t know the origins of multi-tasking, but the very mention of it suggests that someone had “time on their hands.” So remember, when you’re put on hold, driving to work, stuck in traffic, stopped at a light, sorting parts, waiting in line, sitting in the doctors office, watching commercials, or just looking for lost or misplaced items – your time is running out.

Is time a friend or foe? I suggest the answer is both, as long as we spend it wisely (spelled effectively). Be effective, be Lean, and stop wasting time.

4 comments on “OEE – A Race Against Time”

We need to invest time to remove waste. Time is a tool, not the target in my opinion. Saving time in the short term or efficiency of a single process/employee can never be the target, because lean waste elimination should happen on a system wide scale. I guess the biggest problem with lean adoption is that we need systems thinkers and team players, get away from the old culture of competition and looking into the own backyard only. Improving an organisation has been the privilege of a few in the past…. time to change that. 🙂

Pichat, thank you for your comment. I agree that we need to invest time to remove waste, just as we invest money to make money. Whether we are looking at the system as a whole or just a part of it, time is ultimately the common denominator by which the savings are measured – it is not the target, it is the benefit.

If agile is defined as the ability for a company or organization to continually reinvent itself and adapt to an increasingly complex and unpredictable business environment then I contend that the speed of change is the discriminating factor that differentiates the truly agile from those that aren’t. For this reason, larger corporations tend to be less agile due to their inherently more complex systems, processes, and infrastructure.

As a lean practitioner specializing in turnarounds, I have learned to recognize the value of money and more specifically cash flow. From a business perspective, any steps to improve throughput of any system or process that ultimately reduce the cash to cash cycle are welcomed at all levels in any organization.

If cash is king and time is money, we need to continually learn how to both “invest and save” wisely and effectively.

A quick reply: It’s really interesting that you mention agility and infrastructure. I came to the same conclusion that an overly stringent infrastructure, one that is static and hard to change, is harming an organisation’s ability to adapt to the environment. The first thing many organisational designers do is defining elaborate hierarchies and processes, without built-in change… what a huge waste.

The infrastructure is a typical starting point when I am assessing a company as it is absolutely critical to understand responsibilities, flow of information (data), and communication channels. Almost every turnaround strategy requires some degree of restructuring – some more extensive than others.

Thank you again for your comment and I trust you enjoyed the video! Follow us on Twitter @Versalytics.